FLIR Systems, Inc.
FiREapps PRODUCT: Currency Analytics Pro™
ERP ENVIRONMENT: Multiple ERP Systems
As a former bank FX trader, Randahl clearly understood the importance of complete, timely, and transparent exposure data when it comes to managing foreign exchange. However, at the time, FLIR’s treasury team was stuck in a quagmire of hunting down exposure data from operating units every month only to find that it was too dated and incomplete to analyze, let alone act on.
To compensate for the incomplete data, they looked at historical patterns to try to anticipate future currency movements, and then pay down or build up intercompany accounts accordingly. This pre-pay/lag technique may have been good enough in a stable economic environment with calm currency markets and predictable sales, but those conditions were long gone by the end of 2008.
In addition, while FLIR operates two autonomous but strategically interrelated operating units (Government Systems and Commercial Systems), looking at exposures only at the divisional level obscured natural hedging opportunities, where income in one currency in one division was offset by expenses in that currency in another. Identifying these exposures was key, since a natural hedge is the most cost-effective way to hedge.
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